DON'T MISS : Talking Africa New Podcast – Biden says 'America is Back'. But what does that mean for Africa?

China-Africa: The growing battlefield for digital dominance

By The Africa Report
Posted on Thursday, 11 February 2021 14:40, updated on Tuesday, 16 February 2021 18:51

Technology, particularly that of Chinese telecoms firm Huawei, is a major point of conflict between Washington and Beijing. REUTERS/Carlo Allegri

The first wave of telecoms growth in Africa made millionaires – in some cases, billionaires – of investors who bet on Africans spending on mobile phones.

No one is underestimating the potential of the next wave – inter­locking trade, digital money and communications. Certainly not the Chinese, whose technology, communications and finance companies are heavily invested.

Blockchain and cryptocurrency analyst Michael Kimani, doodling on a napkin one day, sketched out the penetration of Chinese companies into East Africa’s mobile internet stack.

READ MORE Kenya and China reach agreement on debt deferral

“They are operating with a swarm intelligence,” he says, pointing to the interconnected development-­finance support Chinese companies receive. “They have invested a lot in understanding this market, creating a range of devices from $15 to $500, […] and they research needs, such as long-life batteries for basic phones for rural areas.”

China Mobile is building a new submarine cable, alongside Facebook, Orange and others. The project will be completed by 2023 and has the equivalent of all the current cables connecting the continent combined.

To a point, the telecoms companies and internet service providers are leaning on Huawei and ZTE fibre. At the mobile handset level, Transsion now sells every other mobile phone on the continent through its wildly popular Tecno brand, with operating systems developed by Huawei.

The mobile phone companies delivering 1, 2, 3 and soon 4G networks are all, likewise, using Huawei and ZTE technology. On top of that, apps developed in China are increasingly used in Africa, often backed by Chinese venture capitalists. Boomplay, the most successful music-streaming service you have never heard of outside Africa, boasts 75 million users – which puts it in the same bracket as Apple and Spotify.

READ MORE Will China help or hurt the AfCFTA?

To really allow Boomplay, and other apps that sit on mobile phones, to take off, you need to be able to monetise. Huawei’s latest high-end Mate 40 smartphone was launched in Africa, with a new feature: an M-Pesa-like app that allows for secure transactions in a Chinese cryptocurrency.

It is not just about monetising apps, argues Eric Olander, managing editor of The China Africa Project. He says there is a battle worldwide to establish standards, including in crypto­currencies, and Chinese companies are using Africa as a proving ground for Beijing’s new digital currency electronic payment [DCEP] system.

“Imagine getting into the Transsion ecosystem with a DCEP cryptocurrency to facilitate the functionality on things like Palmpay or Boomplay,” says Olander. “The user will never know this is a Chinese cryptocurrency, it just facilitates the transactions.”

It is not just China. Companies from the US are very much in the race. In 2019, Visa dropped $200m into Nigerian payments company Interswitch. Stripe bought Nigerian fintech Paystack for $200m this year. Facebook’s Libra project is not dead, and it is already trialing payments on WhatsApp in India. Africa will be one of many global battlefields for digital dominance.